Chewy, Inc. CHWY is expanding its addressable market through a balanced strategy focused on premium offerings and value-oriented products. The company believes that this dual approach allows it to attract a broader customer base while increasing spending from existing customers. Management highlighted that growth opportunities remain strong across pet consumables, health products and private brands, especially as consumers continue shifting toward e-commerce and subscription-based purchasing.
Chewy’s premium product mix continues to drive higher customer spending and stronger profitability. The company noted that premium and health-related categories remain key contributors to net sales per active customer (NSPAC) growth. Veterinary services, fresh pet food and wellness offerings are generating strong engagement, with Chewy Vet Care emerging as one of the fastest NSPAC compounders within the business. Premium products also contributed to the fiscal 2025 gross margin expansion, which improved 60 basis points year over year to 29.8%.
At the same time, Chewy is aggressively expanding into more affordable product categories through its new private-brand platform, Chewy Made. Management said the initiative will introduce dog food and cat nutrition products at accessible price points, helping the company reach a wider range of pet owners without sacrificing margins. Consumables represent roughly $50-$60 billion of the overall $90-billion pet food and supplies market, making it the company’s largest growth opportunity.
Chewy expects private brands to eventually achieve low-to-mid teens penetration of total net sales while delivering margins roughly 500 basis points above the base business. Combined with projected fiscal 2026 revenue growth of 8-9% and the adjusted EBITDA margin expansion to 6.6-6.8%, the company’s premium-and-value strategy is positioning it to capture a larger share of the evolving pet care market.
CHWY’s Price Performance, Valuation & Estimates
Chewy, which competes with BARK, Inc. BARK and Petco Health and Wellness Company, Inc. WOOF, has fallen 17.7% in the past three months against the industry’s growth of 17.7%. BARK shares have declined 41.4%, whereas Petco has lost 2.7% in the same period.
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From a valuation standpoint, CHWY trades at a trailing price-to-sales ratio of 0.63X, below the industry’s average of 2.02X. It has a Value Score of A. CHWY is trading at a premium to BARK (with a forward 12-month P/S ratio of 0.17) and Petco (0.13).
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The Zacks Consensus Estimate for CHWY’s fiscal 2026 earnings implies year-over-year growth of 28.4%, whereas the same for fiscal 2027 indicates an uptick of 23.1%. Estimates for fiscal 2026 and 2027 have been revised upward by 7 cents and 9 cents, respectively, in the past 60 days.
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CHWY currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).